Wbg says shift to real-time payroll reporting represents transformative change for businesses

Wbg, one of Scotland’s leading independent specialist full-service accountancy firms, says that an imminent shift to real-time payroll reporting represents a transformative change for businesses.

Set to take effect in April 2026, the new real-time payroll reporting rules will require businesses to report income tax and Class 1A National Insurance Contributions (NICs) for most benefits-in-kind to HMRC in real-time.

The change will mean that many taxpayers will no longer have their income tax collected in arrears, with end-of-year tax returns set to be phased out.

From April 6th this year, businesses will start to pay 15% NIC on benefits-in-kind, such as company cars, health insurance and gym memberships. Then, a year later, they will be required to report any benefits in real-time while also paying the higher 15% NIC rate.

Margaret Egan, Head of Payroll at Wbg, advised that, to deter any challenges, early preparation, robust planning, and leveraging professional advice will help mitigate risks and ensure a smoother transition.

“Businesses should view this as an opportunity to modernise their payroll systems, improve compliance, and streamline operations for future growth,” she said.

“Many employees may be unaware of how these changes will impact their take-home pay and budgeting. They would be advised to provide clear communication to help them understand the shift to real-time tax collection and its implications.

“The immediate transition may be challenging, although real-time reporting could reduce errors and administrative burdens in the long run by eliminating the need for end-of-year tax reconciliations.

“Unsurprisingly, more businesses are looking to outsource their payroll function as long gone
are the days of just pressing buttons!”

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